ING: The EUR
EUR/USD is trading quite well despite higher energy prices and an unresolved French budget crisis. One can only conclude that the biggest market driver at the moment is the heavy and concentrated positioning in US tech and the dollar, which is being gently pared back. Expect FX traders to keep a very close watch on the short end of the US curve now. Expectations for further Fed tightening have stayed rock-solid at around +75bp over recent weeks. We think that could remain the case for the coming months and that the dollar could stay strong. But any tech wobble that prompts a dovish re-pricing at the short-end could lead to a broader dollar correction. There is little on the eurozone calendar today apart from the last of the ECB speakers before the blackout period commences later today. See here for a preview of next week's ECB meeting. We do not think there is a strong case for EUR/USD to trade a lot higher. But if US tech does suffer now, a break of 1.1270/75 could open up 1.1340/50. However, we would not chase the rally. 1.13 remains our one-month forecast as outlined in this month's FX Talking.
EUR/USD is trading quite well despite higher energy prices and an unresolved French budget crisis. One can only conclude that the biggest market driver at the moment is the heavy and concentrated positioning in US tech and the dollar, which is being gently pared back. Expect FX traders to keep a very close watch on the short end of the US curve now. Expectations for further Fed tightening have stayed rock-solid at around +75bp over recent weeks.
We think that could remain the case for the coming months and that the dollar could stay strong. But any tech wobble that prompts a dovish re-pricing at the short-end could lead to a broader dollar correction. There is little on the eurozone calendar today apart from the last of the ECB speakers before the blackout period commences later today. See here for a preview of next week's ECB meeting.
We do not think there is a strong case for EUR/USD to trade a lot higher. But if US tech does suffer now, a break of 1.1270/75 could open up 1.1340/50. However, we would not chase the rally. 1.13 remains our one-month forecast as outlined in this month's FX Talking.